State Budget Shortfall Growing: Easley May Declare Emergency

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RALEIGH — North Carolina's budget woes are worse than officials projected. The situation is so bad, Gov. Easley may declare an emergency as early as Wednesday.

The General Assembly learned that the budget shortfall could reach $700 million. Earlier, the shortfall was projected at $500 million. The emergency budget orders would give the governor latitude to cut money from state agencies and programs. Easley wants to make the cuts as painless as possible.

"We are going to try and not make the [cuts] that affect people so much," Easley said. "We want to cut things rather than services to the extent that we can."

While Easley says he has not made decisions on specific steps, but he could take such steps as going into state retirement funds or delaying school construction payments.

Senate leader Marc Basnight (D-Manteo) believes lawmakers will shy away from state job layoffs or tax increases, instead focusing on unspent money. One possible source of extra money is the $256 million set aside for helping Hurricane Floyd's victims. That is not an option for Down East lawmakers.

"No one got 100 percent recovery," said Nash Co. Rep. Gene Arnold, a Republican. "There are a lot of people who still have not had anything given to them or any chance to get any funding, and they are still looking for things they need to replace that were literally gone with the flood."

State budget officials say revenue from January tax collections essentially came in as expected. However, they say manufacturing job losses will translate into slowing revenues in the remaining five months of the fiscal year.
From staff and wire reports